Hi, I do not do my own taxes but will use this benefit to do my son's. We have already evaluated that it makes more sense for my son to claim himself as a dependent since he will get a much larger benefit than we will as he has been earning income since July (he was a student for 1/2 of last year). My question is what do I do with his 1098-T from his school? where does that go on his return? is there a form or a line on the 1040? Does he need to enter his 1095-C info anywhere?
The 1098-T is a big deduction for him. He qualifies for the American Opportunity credit if he has a tuition expense. You will enter it into his federal return in the 'Deductions and Credits' section. Scroll down to 'Education and click start next to the 1089-T.
The 1095-C is informational only and does not need to be included with his federal return. Your state may require you to verify health insurance when you get to that return so you may need it for that (depending on where you live).
quick follow up on the 1098-T. I don't have it in front of me... I looked up that it's used to reports payments received and payments due from the paying student. I know that he got an annual scholarship (tuition deduction) from the school. is that what this form is reporting? also he has student loans (Stafford) and is now making payments. do they factor into the return anywhere? thank you!
Since you are not claiming him as a dependent, if he is paying his student loans, then he may be able to claim the student loan interest deduction. In order to claim the Student Loan interest, you also must be legally obligated to pay the interest and have paid the interest. As a married couple, your MAGI must be less than $155,000 to take the full deduction and less than $185,000 to take a gradually reduced deduction.
The Scholarship will not affect him if it is for less than his tuition in box 1. If box 5 is more than box 1 then the amount that is over that was not used for eligible education expenses, would become taxable income. If this amount was used to cover Room and board then it would not be considered eligible education expenses.
How old is he? What degree level is he working on?
If he is under 24, his ability to claim the AOTC may be limited.
"If you were under age 24 at the end of 2023 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Instead, you can claim your allowed credit, figured in Part II, only as a nonrefundable credit to reduce your tax.
You don't qualify for a refundable American opportunity credit if 1 (a, b, or c), 2, and 3 below apply to you.
1. You were:
a. Under age 18 at the end of 2023, or
b. Age 18 at the end of 2023 and your earned income (defined later) was less than one-half of your support (defined later), or
c. Over age 18 and under age 24 at the end of 2023 and a full-time student (defined later) and your earned income (defined later) was less than one-half of your support (defined later).
2.At least one of your parents was alive at the end of 2023.
3.You're not filing a joint return for 2023." Instructions for form 8863
thanks Vanessa...
so, the scholarship is way less than the tuition (again, don't have form in front of me but that is the facts)
I assume that where RobertB4444 replied: Scroll down to 'Education and click start next to the 1089-T that he was referring to the ONLINE Turbotax form? is this form also reported on the state (NJ)?
also, to answer your other questions, he is graduated and working full time now. He was 22 at the end of 2023 and graduated May 2023. We are still supporting him (home, food, car) tho he does collect a decent paycheck (a treat for his first year of true adulthood)
2.yes - both alive at the end of 2023.
3. he is not filing a joint return for 2023 (we are).
You don't need to report it on the NJ tax return. TurboTax will transfer everything you enter from the federal return to the state returns, so you only need to enter it on the federal return.
He won't be eligible for the refundable part of the AOTC because he meets all three conditions. 1c, 2, and 3. Since he did not provide more than half of his own support during 2023, you can claim him and take the $500 Other Dependent Credit on your return. You may also qualify for the education credit. He would still file his own income tax return for his wages, but he would mark the I can be claimed by someone else box.